As we often get questions about the specific effective lives for residential property, we’ve decided to post the current effective lives here. These effective lives are current at the time of posting, and come from Tax Ruling 2011/2 (TR 2011/2). This legislation replaced TR 2010/2 and applies from the 1st of July 2011 to the present. We expect there to be an update to this ruling prior to the start of the next financial year, however the residential list is not as dynamic as the commercial one. Consequently, we don’t expect too many changes but will keep you updated nonetheless. Most of these effective lives are unchanged from 2003/2004.

As a reminder, for all property purchased after the 10th of May 2006, the diminishing value rate will be 200 divided by the effective life, and the prime cost method rate is 100 divided by the effective life. More information on that calculation is available here.

It’s important to note that for a particular asset, if you were using an effective life from the determination as in force before the latest amendment (for example, as contained in the Schedule to TR 2010/2), you should continue to use that life for that asset.

There are also specific rules for plant and equipment items acquired prior and post the 21st of September 1999, which can be found in the ruling itself linked below.

We provide a copy of the current effective lives here for convenience and more information can be found via the ruling itself here.

Remember that there is more to tax depreciation that applying the correct effective life and calculating the rate. Legislation allowing immediate deductions and low value pools also come into play. It’s important that you engage a suitably qualified tax depreciation expert to prepare your report, as the ATO state that valuers, real estate agents, accountants and solicitors do not have the relevant qualifications or experience to assess and calculate the capital allowances and residual values relating to construction costs.